Federal Reserve's Bostic: Restoring scarce reserves is feasible; unaware of Waller's plans for the Federal Reserve

On February 6, Federal Reserve’s Bostic stated, “I believe restoring scarce reserves is feasible.” I have no idea what Wash’s plans are regarding the Fed’s “regime change.” Note: After the 2008 financial crisis, the Federal Reserve adopted the “ample reserves” framework to stabilize the market; returning to “scarce reserves” means reducing reserve levels to pre-crisis levels, which could improve the effectiveness of monetary policy transmission but requires careful management of liquidity risk. Bostic’s statement hints at confidence in further reducing the balance sheet.

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